Illinois counties fight Supreme Court ruling on property tax seizures

Officials from eight Illinois counties are grappling with the fallout of a U.S. Supreme Court ruling that could jeopardize the longstanding practice of seizing homes over unpaid property taxes. 

The court’s decision could leave local governments across the state with millions of dollars in potential losses, Crain’s reported.

At the heart of the issue is whether the constitution allows for governments to strip homeowners of their property, including their equity, to recover unpaid taxes that can be a fraction of a property’s market value. The Supreme Court’s May 2023 ruling found that governments are entitled to tax payments but cannot overreach by seizing property disproportionate to the tax debt.

The Supreme Court’s decision triggered homeowners in counties including DuPage, Kane, Lake and Will to file a lawsuit against their respective counties in the U.S. District Court for the Northern District of Illinois in November. The suit contends that the practice of tax-debt seizures violates homeowners’ rights under the Fifth Amendment, which prohibits the taking of private property for public use without just compensation.

However, officials from the implicated counties, led by DuPage County Treasurer Gwen Henry and State’s Attorney Robert Berlin, are fighting back. They argue that Illinois law significantly differs from Minnesota’s and that the high court’s ruling doesn’t invalidate the Illinois tax sale system.

They contend that under Illinois law, property owners have multiple chances to reclaim any surplus or excess value seized beyond the delinquent taxes and fees, a process usually giving the homeowner years, and sometimes as long as a decade, to avoid losing their properties.

The officials assert that counties in Illinois don’t profit from these tax sales beyond recouping the unpaid taxes. Any additional financial gain from the property’s value accrues to private tax buyers, who operate independently of the county, they claim. Tax buyers bid to buy the rights to collect late tax debts at each county’s annual delinquent tax sale.

Despite these arguments, legal experts warn that the counties’ position could be flawed. They suggested that by outsourcing the collection of tax debts to buyers on the private market — who can eventually sue to take title from the homeowner if they remain unpaid for fronting the tax bills — counties do reap benefits indirectly, such as future tax revenue and the removal of non-paying homeowners, without shouldering the blame for property seizures.

Data adds weight to the issue. In Will County, for instance, a December report of tax sales spanned over 60 pages, listing hundreds of property numbers, the outlet reported. Cook County Treasurer Maria Pappas reported in November that over 45,000 properties, collectively owing more than $169 million in tax debt, would be subject to sale if left unpaid.

—Quinn Donoghue

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